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CS Professional · Corporate Restructuring, Valuation and Insolvency · Application for Corporate Insolvency Resolution Process

Sundaram Packaging Ltd supplied cartons to Kaveri Foods Pvt Ltd and delivered a demand notice for the unpaid invoice on 1 March. On 8 March, Kaveri Foods sent a written notice to Sundaram bringing to its notice the existence of a dispute regarding the quality of the cartons. Sundaram files an application on 15 March. How should the Adjudicating Authority deal with it?

The application must be rejected. Section 9(5)(ii)(d) requires rejection where the operational creditor has received a notice of dispute. Kaveri Foods sent its notice within the ten days allowed under section 8(2), so Sundaram's application cannot be admitted.

  1. AReject it, because a notice of dispute has been received by the operational creditorCorrect
  2. BAdmit it, because the dispute notice was sent after seven days
  3. CAdmit it, because the ten-day period has not been exhausted for the creditor
  4. DKeep it pending until the corporate debtor pays the operational debt

Explanation

Under section 9(5)(ii)(d), the application is rejected if notice of dispute has been received by the operational creditor. The debtor sent the notice within the ten days allowed by section 8(2), so it is valid. Admission is not available when a dispute notice exists.

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